Figure 22-8

Multiple Choice

Figure 22-8. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate."
-Refer to Figure 22-8. A significant increase in the world price of oil could explain

A) the shift of the aggregate-supply curve from AS₁ to AS₂, but it could not explain the shift of the Phillips curve from PC₁ to PC₂.
B) the shift of the Phillips curve from PC₁ to PC₂, but it could not explain the shift of the aggregate-supply curve from AS₁ to AS₂.
C) both the shift of the aggregate-supply curve from AS₁ to AS₂ and the shift of the Phillips curve from PC₁ to PC₂.
D) neither the shift of the aggregate-supply curve from AS₁ to AS₂ nor the shift of the Phillips curve from PC₁ to PC₂.